ASEAN Finance Ministers Discuss Economic Integration Amidst Regional Tensions
MANILA – ASEAN finance ministers gathered in Manila on Tuesday at the 10th ASEAN Finance Ministers’ Investors Seminar (AFMIS) to discuss various political and economic issues, and finalize the framework for 2015 economic integration.
Amidst renewed political turmoil in Thailand and escalating tensions between China and Vietnam over disputed waters in the South China Sea, leaders and government officials in banking and finance discussed a number of topics at the seminar ahead of the commencement of the World Economic Forum on East Asia in Manila earlier this week.
“Inter-ASEAN trade is growing rapidly. In the past three years, the growth of inter-ASEAN trade has outpaced the growth of world trade. This just shows the benefits of a more connected, more harmonized ASEAN which, as a single country, would have the third largest population and a GDP of over US$2 trillion,” Philippine Finance Secretary Cesar Purisima said at the commencement of the AFMIS meeting alongside Myanmar Finance and Revenue Minister U Win Sheing.
With political instability in Thailand a hot topic at the seminar, Purisima labeled the recent declaration of martial law in Thailand a “necessary development” to end ongoing political turmoil and characterized Thailand’s troubles as “the best argument” for regional integration.
“The global supply chains are working and there are no disruptions and that’s what’s important to the global economy. Politics can happen but at the same time business has its own rhyme and rhythm,” Purisima said of the declaration of martial law in the country.
“I think it only shows you this is a march towards maturation for members of the region. For a long time it’s Myanmar that had that challenge, but they’ve improved their domestic policies and governance. Now it’s Thailand’s turn. But what’s important is it is the best argument for an integrated region,” he continued.
Alongside the AFMIS meeting Tuesday, ASEAN defense ministers held an informal meeting with their Chinese counterparts after a ministerial meeting in Myanmar to discuss Vietnam and China’s escalating tensions in the South China Sea. With participants at the 90-minute meeting labelling the talks “very constructive” and “positive,” many in the diplomatic and business community hope ASEAN involvement will help defuse anti-China tensions in Vietnam that were sparked after a Chinese drilling rig was moved into an area of the South China Sea claimed by Hanoi.
“Disputes I think will be a regular part of a more integrated global economic environment. The important thing is that you don’t allow one dispute in one dimension to rule the rest of the relationships. I believe that whatever differences we have is much less than the gains we can have,” Purisima argued.
“Investments may slow down because the risk perceptions may differ but all of these are short term. As in the past things do pass by, things do come down. And when they come down, whatever happens afterwards, everyone’s stronger,” he added.
Among other topics discussed, increasing tourism across ASEAN was a main focus of the seminar.
“ASEAN, if it were one country, had 85 million tourists last year, outperforming France,” Purisima observed.
Earlier this month, a bill was introduced into the Philippine Senate that would grant tax incentives to foreign and local film production companies in an effort to promote the country’s film industry and create a market for film tourism – one of numerous initiatives across the region seeking to attract more tourists and stimulate tourism industry development.
In addition to tourism, other key topics discussed at the seminar included energy and infrastructure.
The ASEAN Infrastructure Fund (AIF) in particular was discussed at length, and is set to be a key component of ASEAN’s efforts to strengthen regional connectivity and close the infrastructure gap that still exists in the region.
One of the most positive outcomes of the seminar was a clear vote of confidence that ASEAN economies will be prepared to weather external shocks as the U.S. Federal Reserve proceeds with tapering.
“The ASEAN region has fared well in the aftermath of the 2008 global economic crisis. With strong fundamentals and improved regional cooperation, resiliency has further improved,” noted Shien.
“If you look at FDI to the region, you will see that what is driving those is the prolonged period of macroeconomic stability. This has been boosting investor confidence,” added Josephine Theo, senior minister of state at Singapore’s Ministry of Finance and Transport.
There can be no doubt, however, that Thailand’s continuing political unrest will continue to cast a shadow over ASEAN and the community’s planned economic integration in 2015 as some worry the unrest may impact the county’s ability to commit to economic policy initiatives needed for successful integration or harm its overall economic standing.
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